THE GLADSTONE liquefied natural gas project, operated by Santos on Curtis Island, is set to enter the execution and delivery cycle in 2015.

Originally sanctioned by Santos and project partners Petronas, Total and Kogas in 2011, the project’s total development cost was estimated to be $16 billion.

But it did not take long for the size of the project, and its cost, to blow out.

Santos announced a 15 per cent increase in capital expenditure to $18.5 billion in order to fund the drilling of an additional 300 coal seam gas wells.

The project involves extraction of coal seam gas from fields around Roma, Emerald, Injune and Taroom, a 435-kilometre gas transmission pipeline from the gas fields to Gladstone and a two-train LNG processing facility on Curtis Island.

The GLNG development has the capacity to produce 7.8 million tonnes of LNG per year.

The venture currently has sales contracts in place with Petronas and Kogas for 7.2 million tonnes of LNG in aggregate per year.

The GLNG project has created more than 6,000 job opportunities during its construction phase and will create about 1,000 permanent jobs when it is in operation.

Santos has indicated that the first train will be operational sometime in 2015, with LNG production to ramp up over three to six months.

First LNG from train 2 is expected between six and nine months after train 1, after which LNG output to increase over the next two to three years.

Once GLNG enters the operational phase and ramps up to capacity, Santos will hold more than 3 million tonnes of equity LNG, factoring in its 13.5% stake in the PNG LNG project.

GLNG taking shape

Santos managing director David Knox said in the company’s September quarterly report that the project was approaching 90% completion rate, meaning the finishing line for first gas in 2015 was now clearly insight, with the project having reached the peak of its construction activity in mid-2014.

The company said it continued to deliver key construction milestones, including commissioning of the first upstream gas hub, first gas into the gas transmission pipeline, delivery of the final train 2 module and the completion of hydro-testing of the second LNG tank.

In the gas fields, the company’s drilling remains ahead of schedule, with almost 600 wells drilled since January 2011. Two of the three Santos GLNG gas compression hubs have been handed over for commissioning and construction of the third is almost complete

The first-half of 2014 was a busy period for the upstream component of GLNG, with 77 wells spudded in the six months. The company also completed construction of the Fairview hub 4 and 5 with commissioning underway, while construction of Roma hub 2 was substantially complete.

In addition to this, the marine crossing tunnelling was completed and the first LNG tank hydrotest was undertaken.

Some important inroads have been achieved in the most recent months, with the final GLNG train 2 modules being delivered to Curtis Island.

The two steel structures, which have a combined weight of more than 2,890 tonnes, mark the completion of 15 million work hours over two and a half years to construct and deliver a total of 111 modules to the plant from AG&P’s module yard in Batangas, in the Philippines.

Today all 82 Train 1 modules and 27 of the 29 Train 2 modules have been set on their foundations.

Santos GLNG downstream vice president Rod Duke welcomed the delivery of the final modules.

“The precision and expertise involved in building these vital pieces of infrastructure has been extraordinary,” Mr Duke said.

“Each module had to be built with a margin of error of only 2mm – an amazing feat when you think the heaviest weighed more than 2,500 tonnes and longest stretched nearly 75 metres.”

Santos has also completed successful hydro-testing of the second LNG tank.

The commissioning and completions workforce has now transitioned to commissioning of the Fairview 4 gas processing hub while construction of the Roma 2 gas processing hub is now complete.

Commissioning of the pipeline compressor station is also complete and construction of the 120-kilometre Comet Ridge to Wallumbilla pipeline loop is now over 85% complete.

As for the construction of the LNG plant, Santos said it was progressing well, with gas commissioning expected to be delivered to the plant in the fourth quarter of 2014.

Santos recorded these achievements while setting a record of five million hours worked without any staff member sustaining a lost-time injury.

A Santos GLNG spokesperson said the milestone – recognising that no worker had missed work due to injury for six months – had been achieved while construction at the plant was at its peak.